FCMC plans to perform 38 onsite inspections in 2021

03.02.2021
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In 2021, the Financial and Capital Market Commission (FCMC) is planning to carry out 38 different onsite* inspections to gain reasonable assurance regarding compliance of the activities of Latvia's financial and capital markets participants with legal requirements, as well as to ensure the protection of investors interests.

FCMC Chairwoman Santa Purgaile emphasises: “The Financial and Capital Market Commission has worked closely on planning and improving supervisory quality in order to enhance the reputation of the financial sector and its resilience to various impact factors more efficiently in 2021, as well as to ensure the protection of the interests of the customers of financial institutions. This year, information on the planned inspections is made publicly available to the sector, the public and all interested parties with a view to raise awareness of supervisors’ work and monitoring process, as well as to promote transparency and openness.”

The plan reflects the upcoming onsite inspections, but it may be modified in line with the risk assessment updated in the everyday monitoring. In addition to the planned inspections, the FCMC provides day-to-day supervisory functions, as well as responding to complaints or other information in the FCMC’s possession, which raises suspicion of non-compliance of the activities of financial and capital market participants with regulatory requirements, the FCMC performs impromptu inspections or applies other supervisory measures.

In 2021, the FCMC is planning to perform 10 inspections in the field of the prevention of money laundering and terrorism and proliferation financing (AML/CTPF) and sanctions, five inspections in the field of investment services and five – in information technology (IT) area, including one overall IT risk assessment, while 23 inspections are planned in the field of prudential supervision, of which three horizontal inspections of less significant banks; besides, the FCMC’s supervisors will participate in the inspections performed by the European Central Bank.**

Broken by segments, 18 inspections are planned in banks in 2021, of which three – in the insurance sector, one inspection in the pension sector, three – in investment management companies, two inspections – in the central securities depositary, two – in payment institutions, one – in electronic money institution, three – in investment firms, and five inspections in cooperative credit unions.

Kristīne Černaja-Mežmale, the Member of the FCMC’s Board, points out: “In 2021, a priority in the supervision of credit institutions is an in-depth analysis of strategies, business models and profitability with a focus on sustainability and balancing profitability. The FCMC also focuses on credit risk and adequacy of provisions, considering the Covid-19 pandemic when carrying out the assessment. In order to implement these priorities and to ensure a more comprehensive outlook, the planned supervisory activities will be performed both on an individual bank and horizontal basis, complemented by focused and interactive dialogues between the FCMC and credit institutions.”

In the field of the AML/CTPF and sanctions, the FCMC will assess effectiveness of the internal control systems of banks and other financial institutions and the implementation of the risk-based approach.

Strengthening internal management and promoting sustainable financing constitute another area of the FCMC’s supervision. As part of this, the work on improving the internal control systems and risk management process of credit institutions will be continued. Given the increasing focus on sustainable financial issues in Latvia, as at the European Union and global level, one of the FCMC’s tasks this year is to identify and explain the importance and significance of this area to the participants of the Latvian financial sector.

The inspection plan is published on the FCMC’s website at: https://www.fktk.lv/wp-content/uploads/2021/02/Onsite-inspections-plan-2021-for-public.pdf.

 

* Onsite inspections will be carried out taking into account the current epidemiological situation and the restrictions imposed, applying a remote approach, where necessary.

** The ECB planned onsite inspection plan is not publicly available and is therefore not included in the publicly available FCMC’s onsite inspection plan.

 

Further information:
Dace Jansone
Head of Communications and Financial Literacy Division
Financial and capital Market Commission
Phone: +371 67774808
E-mail: dace.jansone@fktk.lv

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